How to Short the Dollar UK
There are several ways that traders can short the USD, using derivative products such as spread bets and CFDs. These are suited to different risk tolerances and trading preferences. Traders can also trade the USD directly on spot Forex markets, and the pair tends to be positively correlated with the EUR and NZD, so this can be an effective hedge if you are long these currencies.
How to Short the Dollar UK: A Trader’s Guide
In the early 1990s, legendary Hungarian-American trader George Soros shorted the Pound Sterling against the US Dollar, expecting it to be devalued. He believed that the Pound was being artificially propped up by the Treasury buying it, and he anticipated that Britain would eventually be forced to leave the European Exchange Rate Mechanism (ERM), on September 16, 1992 – a day that became known as Black Wednesday. Soros’s short position was one of the most famous trades in history and netted him $1.1bn dollars.
How to Short the Dollar UK is largely driven by supply and demand, as well as economic news that affects both countries involved in the currency pair. Traders may short a currency pair, such as GBP/USD, because of differing expectations about the financial health of the two countries or based on technical trading strategies. When a trader closes their position, they are re-buying the pair, this time selling the pound and purchasing the USD, and this is how they make their profit. It’s important for traders to carefully consider the risks of shorting a pair before opening a position.